[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9059 Introduced in House (IH)]
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116th CONGRESS
2d Session
H. R. 9059
To require Federal financial supervisory agencies to evaluate a
financial institution's record of meeting community environmentally
sustainable investment needs as part of examinations, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 31, 2020
Mr. Kennedy (for himself and Mr. Cicilline) introduced the following
bill; which was referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To require Federal financial supervisory agencies to evaluate a
financial institution's record of meeting community environmentally
sustainable investment needs as part of examinations, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Climate Protection and Sustainable
Communities Act''.
SEC. 2. CONGRESSIONAL FINDINGS AND STATEMENT OF PURPOSE.
(a) Findings.--Congress finds the following:
(1) Financial institutions that are federally regulated and
supervised have an obligation to serve the convenience and
needs of the entire community, consistent with safe and sound
operations. These institutions include, but are not limited to,
insured depository institutions (and their holding companies,
if any), investment advisers, broker dealers, insurers, non-
bank lenders, credit unions, investment companies, and other
financial institutions of significant size and operations.
(2) The convenience and needs of communities include the
need for environmentally sustainable investment because--
(A) these financial institutions have, as a result
of their investment, lending, and other activities,
contributed to climate change and its effects, and
therefore have a responsibility to act to mitigate
climate change; and
(B) these financial institutions receive Federal
benefits not available to other types of businesses,
including--
(i) support for United States Treasury bond
markets, including extraordinary commitments to
purchase such bonds since the onset of the
COVID-19 health crisis;
(ii) access to the Federal Reserve Discount
Window and other special lending facilities
established by the Board of Governors of the
Federal Reserve System and supported by the
Treasury department;
(iii) measures to maintain efficient,
transparent, and competitive markets;
(iv) regulatory relief during times of
stress in the financial system, such as the
ongoing COVID-19 health crisis; and
(v) other actions to ensure financial
stability and mitigate risk to the financial
system as a whole.
(3) Regulated financial institutions have continuing and
affirmative obligation to help meet the environmentally
sustainable investment needs of the local communities in which
they are chartered.
(4) Regulated financial institutions should reflect the
communities which they serve, which includes people of color
and women.
(b) Purpose.--It is the purpose of this Act to require covered
financial institutions that are regulated and supervised by one or more
appropriate financial regulators to meet the environmentally
sustainable investment needs of the entire community, consistent with
the safe and sound operation of such institutions.
SEC. 3. DEFINITIONS.
(a) In General.--In this Act:
(1) Application for a deposit facility.--The term
``application for a deposit facility'' means an application to
the appropriate financial regulator otherwise required under
Federal law or regulations thereunder for--
(A) a charter for a national bank or Federal
savings and loan association;
(B) deposit insurance in connection with a newly
chartered State bank, savings bank, savings and loan
association or similar institution;
(C) the establishment of a domestic branch or other
facility with the ability to accept deposits of a
regulated financial institution;
(D) the relocation of the home office or a branch
office of an insured depository institution (as defined
in section 3 of the Federal Deposit Insurance Act);
(E) the merger or consolidation with, or the
acquisition of the assets, or the assumption of the
liabilities of an insured depository institution
requiring approval under section 18(c) of the Federal
Deposit Insurance Act or under regulations issued under
the authority of title IV of the National Housing Act;
or
(F) the acquisition of shares in, or the assets of,
an insured depository institution requiring approval
under section 3 of the Bank Holding Company Act of 1956
or section 408(e) of the National Housing Act.
(2) Appropriate financial regulator.--The term
``appropriate financial regulator'' has the meaning given in
section 803 of the Payment, Clearing, and Settlement
Supervision Act of 2010 (12 U.S.C. 5462).
(3) Covered financial institution.--The term ``covered
financial institution'' means--
(A) an insured depository institution (as defined
in section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813));
(B) a depository institution holding company (as
defined in such section);
(C) an investment adviser or investment company (as
defined in section 202 of the Investment Advisers Act
of 1940 (15 U.S.C. 80b-2));
(D) a covered broker or dealer (as defined in
section 201(a)(7) of the Dodd-Frank Wall Street Reform
and Consumer Protection Act (12 U.S.C. 5381(a)(7)));
(E) admitted insurers;
(F) an insured credit union (as defined in section
101 of the Federal Credit Union Act (12 U.S.C. 1752));
(G) a non-bank lender; and
(H) any entity that has been identified as
systemically important by the Financial Stability
Oversight Council.
(4) Environmentally sustainable investment.--The term
``environmentally sustainable investment'' means investments,
loans, and other financial products or services that support
climate mitigation and adaptation efforts, enterprises, and
projects whose impacts have been evaluated to equitably and
sustainably advance social and environmental welfare.
(b) Application of Entire Community.--For purposes of this Act,
with respect to a covered financial institution whose business
predominately consists of serving the needs of military personnel who
are not located within a defined geographic area, such covered
financial institution may define the term ``entire community'' to
include the entire deposit customer base without regard to geographic
proximity to the covered financial institution.
SEC. 4. ASSESSMENT OF COVERED FINANCIAL INSTITUTIONS.
(a) In General.--Except as provided in section 6, not less than
once every 24 months an appropriate financial regulator shall assess
the record of a covered financial institution of meeting the
environmentally sustainable investment needs of the entire community of
such institution, including low- and moderate-income neighborhoods,
consistent with the safe and sound operation of such institution.
(b) Requirements for Covered Financial Institutions.--
(1) Rating.--
(A) In general.--A covered financial institution
that received a rating described in subparagraph (C),
(D), or (E) of section 5(b)(2) shall, within the 12-
month period beginning on the date of receipt of such
rating, take such action as may be necessary in order
for such institution to achieve a rating of
``satisfactory record of meeting community
environmentally sustainable investment needs''.
(B) Penalty.--A covered financial institution that
fails to meet the requirements of subparagraph (A)
shall be subject to such penalties as determined
appropriate by the appropriate financial regulator of
such institution.
(2) Approval of requests.--With respect to any request
submitted by a covered financial institution to the appropriate
financial regulator to take an action that requires the
approval of the regulator, the appropriate financial regulator
may only approve such request if the covered financial
institution received a rating of ``satisfactory record of
meeting community environmentally sustainable investment
needs'' or better during the most recent examination of the
covered financial institution under this section.
(c) Majority-Owned Institutions.--In assessing and taking into
account, under subsection (a), the record of a nonminority-owned and
nonwomen-owned covered financial institution, the appropriate financial
regulator may consider as a factor capital investment, loan
participation, and other ventures undertaken by such covered financial
institution in cooperation with minority- and women-owned financial
institutions and low-income credit unions, if such activities help meet
the environmentally sustainable investment needs of the local
communities in which such covered financial institution is chartered.
(d) Financial Holding Company Requirement.--
(1) In general.--An election by a bank holding company to
become a financial holding company under section 4 of the Bank
Holding Company Act of 1956 shall not be effective if--
(A) the Board finds that, as of the date the
declaration of such election and the certification is
filed by such holding company under section 4(l)(1)(C)
of the Bank Holding Company Act of 1956, not all of the
subsidiary insured depository institutions of the bank
holding company had achieved a rating of ``satisfactory
record of meeting community environmentally sustainable
investment needs'', or better, at the most recent
examination of each such institution; and
(B) the Board notifies the company of such finding
before the end of the 30-day period beginning on such
date.
(2) Limited exclusions for newly acquired insured
depository institutions.--Any insured depository institution
acquired by a bank holding company during the 12-month period
preceding the date of the submission to the Board of the
declaration and certification under section 4(l)(1)(C) of the
Bank Holding Company Act of 1956 may be excluded for purposes
of paragraph (1) during the 12-month period beginning on the
date of such acquisition if--
(A) the bank holding company has submitted an
affirmative plan to the appropriate financial regulator
to take such action as may be necessary in order for
such institution to achieve a rating of ``satisfactory
record of meeting community environmentally sustainable
investment needs'', or better, at the next examination
of the institution; and
(B) the plan has been accepted by such agency.
(3) Definitions.--For purposes of this subsection, the
following definitions shall apply:
(A) Bank holding company; financial holding
company.--The terms ``bank holding company'' and
``financial holding company'' have the meanings given
those terms in section 2 of the Bank Holding Company
Act of 1956.
(B) Board.--The term ``Board'' means the Board of
Governors of the Federal Reserve System.
(C) Insured depository institution.--The term
``insured depository institution'' has the meaning
given the term in section 3(c) of the Federal Deposit
Insurance Act.
SEC. 5. WRITTEN EVALUATIONS.
(a) Required.--
(1) In general.--Upon the conclusion of each examination of
a covered financial institution under section 4, the
appropriate financial regulator shall prepare a written
evaluation of the institution's record of meeting the
environmentally sustainable investment needs of its entire
community, including low- and moderate-income neighborhoods.
(2) Public and confidential sections.--Each written
evaluation required under paragraph (1) shall have a public
section and a confidential section.
(b) Public Section of Report.--
(1) Findings and conclusions.--
(A) Contents of written evaluation.--The public
section of the written evaluation shall--
(i) state the appropriate financial
regulator's conclusions for each assessment
factor identified in the regulations prescribed
by such appropriate financial regulator to
implement this Act;
(ii) discuss the facts and data supporting
such conclusions; and
(iii) contain the rating of the covered
financial institution and a statement
describing the basis for the rating.
(B) Metropolitan area distinctions.--The
information required by clauses (i) and (ii) of
subparagraph (A) shall be presented separately for each
metropolitan area in which a covered financial
institution maintains one or more domestic branch
offices.
(2) Assigned rating.--The rating of a covered financial
institution referred to in paragraph (1)(A)(iii) shall be one
of the following:
(A) ``Outstanding record of meeting community
environmentally sustainable investment needs''.
(B) ``Satisfactory record of meeting community
environmentally sustainable investment needs''.
(C) ``Sufficient record of meeting community
environmentally sustainable investment needs''.
(D) ``Needs to improve record of meeting community
environmentally sustainable investment needs''.
(E) ``Substantial noncompliance in meeting
community environmentally sustainable investment
needs''.
(c) Confidential Section of Report.--
(1) Privacy of named individuals.--The confidential section
of the written evaluation shall contain--
(A) all references that identify any customer of
the covered financial institution, any employee or
officer of such institution, or any person or
organization that has provided information in
confidence to a Federal or State financial supervisory
agency; and
(B) any statements obtained or made by the
appropriate financial regulator in the course of an
examination which, in the judgment of the regulator,
are too sensitive or speculative in nature to disclose
to the covered financial institution or the public.
(2) Disclosure to depository institution.--The confidential
section may be disclosed, in whole or part, to the covered
financial institution, if the appropriate financial regulator
determines that such disclosure will promote the objectives of
this Act. However, disclosure under this paragraph shall not
identify a person or organization that has provided information
in confidence to a Federal or State financial supervisory
agency.
(d) Institutions With Interstate Branches.--
(1) State-by-state evaluation.--In the case of a covered
financial institution that maintains domestic branches in 2 or
more States, the appropriate financial regulator shall
prepare--
(A) a written evaluation of the entire
institution's record of performance under this title,
as required by subsections (a), (b), and (c); and
(B) for each State in which the institution
maintains 1 or more domestic branches, a separate
written evaluation of the institution's record of
performance within such State under this title, as
required by subsections (a), (b), and (c).
(2) Multistate metropolitan areas.--In the case of a
covered financial institution that maintains domestic branches
in 2 or more States within a multistate metropolitan area, the
appropriate financial regulator shall prepare a separate
written evaluation of the institution's record of performance
within such metropolitan area under this title, as required by
subsections (a), (b), and (c). If the appropriate financial
regulator prepares a written evaluation pursuant to this
paragraph, the scope of the written evaluation required under
paragraph (1)(B) shall be adjusted accordingly.
(3) Content of state-level evaluation.--A written
evaluation prepared pursuant to paragraph (1)(B) shall--
(A) present the information required by
subparagraphs (A) and (B) of subsection (b)(1)
separately for each metropolitan area in which the
covered financial institution maintains 1 or more
domestic branch offices and separately for the
remainder of the nonmetropolitan area of the State if
the covered financial institution maintains 1 or more
domestic branch offices in such nonmetropolitan area;
and
(B) describe how the appropriate financial
regulator has performed the examination of the covered
financial institution, including a list of the
individual branches examined.
(e) Definitions.--For purposes of this section the following
definitions shall apply:
(1) Domestic branch.--The term ``domestic branch'' means
any branch office or other facility of a covered financial
institution that accepts deposits, located in any State.
(2) Metropolitan area.--The term ``metropolitan area''
means any primary metropolitan statistical area, metropolitan
statistical area, or consolidated metropolitan statistical
area, as defined by the Director of the Office of Management
and Budget, with a population of 250,000 or more, and any other
area designated as such by the appropriate financial regulator.
(3) State.--The term ``State'' has the same meaning as in
section 3 of the Federal Deposit Insurance Act.
SEC. 6. SMALL COVERED FINANCIAL INSTITUTION REGULATORY RELIEF.
(a) In General.--Except as provided in subsections (b) and (c), any
covered financial institution with aggregate assets of not more than
$250,000,000 shall be subject to routine examination under this Act--
(1) not more than once every 60 months for an institution
that has achieved a rating of ``outstanding record of meeting
community environmentally sustainable investment needs'' at its
most recent examination under section 4;
(2) not more than once every 48 months for an institution
that has received a rating of ``satisfactory record of meeting
community environmentally sustainable investment needs'' at its
most recent examination under section 4; and
(3) at least once every 24 months for an institution that
has received a rating of less than ``satisfactory record of
meeting community environmentally sustainable investment
needs'' at its most recent examination under section 4.
(b) No Exception From Examinations in Connection With Applications
for Deposit Facilities.--A covered financial institution described in
subsection (a) shall remain subject to examination under this title in
connection with an application for a deposit facility.
(c) Discretion.--A covered financial institution described in
subsection (a) may be subject to more frequent or less frequent
examinations for reasonable cause under such circumstances as may be
determined by the appropriate financial regulator.
SEC. 7. APPLICABILITY.
The requirements of this Act shall not supplant the requirements of
the Community Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.).
SEC. 8. REPORT TO CONGRESS.
Each appropriate financial regulator shall include in its annual
report to the Congress a section outlining the actions it has taken to
carry out its responsibilities under this Act.
SEC. 9. REGULATIONS.
Not later than 180 days after the date of enactment of this Act,
each appropriate financial regulator shall consult with each other
appropriate financial regulator to issue rules to carry out this Act.
To the extent practicable, the appropriate financial regulator shall
issue substantially similar rules.
SEC. 10. EFFECTIVE DATE.
Except as otherwise provided, the requirements of this Act shall
take effect one year after the date of the enactment of this Act.
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